Contingent Consideration

9 Months Ended

Sep. 30, 2021

The following table summarizes information about the Company’s financial instruments measured at fair value on a recurring basis, grouped into Level 1 to 3 based on the degree to which the input to fair value is observable (in thousands):


	September 30, 2021
	Level I		Level II		Level III		Total
DBOT - Contingent consideration1	$	—	$	—	$	649	$	649
Tree Technology - Contingent consideration2	—		—		1,305		1,305
Wave - Contingent consideration3	—		—		1,519		1,519
Solectrac - Contingent consideration4	—		—		1,639		1,639
Total	$	—	$	—	$	5,112	$	5,112



	December 31, 2020
	Level I		Level II		Level III		Total
DBOT - Contingent consideration1	$	—	$	—	$	649	$	649
Tree Technology - Contingent consideration2	—		—		8,311		8,311
Total	$	—	$	—	$	8,960	$	8,960

1This represents the liability incurred in connection with the acquisition of DBOT shares during the three months ended September 30, 2019 and as remeasured as of April 17, 2020. The contractual period which required periodic remeasurement has expired, and therefore the Company will not remeasure this liability in the future. The fair value of DBOT contingent consideration as of September 30, 2021 was valued using the Black-Scholes Merton method. The Company issued 11.3 million shares during the nine months ended September 30, 2020 and partially satisfied this liability. No shares have been issued in the nine months ended September 30, 2021.

2This represents the liability incurred in connection with the acquisition of Tree Technology shares during the three months ended December 31, 2019 and as subsequently remeasured as of September 30, 2021. The fair value of the Tree Technology contingent consideration was valued using a scenario-based method which incorporates various estimates, including projected gross revenue for the periods, probability estimates, discount rates and other factors.

3This represents the liability incurred in connection with the acquisition of WAVE. The liability represents the combination of the contingent shares and the earnout. The contingent shares are the remaining shares to be issued contingent on the receipt of certain customer consents as disclosed in Note 6. The fair value of this contingent consideration was valued using a scenario-based method that indicated based on the probabilities that 100% of the consents will be received. the Company received some consents in the three months ended September 30, 2021 and issued 2.0 million shares accordingly. The earnout liability is dependent on WAVE achieving certain revenue and gross profit margin criteria in 2021, 2022 and cumulatively 2021 and 2022. The fair value of zero has been determined using a scenario-based method which indicated that none of the criteria are likely to be achieved.

4This represents the liability incurred in connection with the acquisition of Solectrac. The liability represents the fair value of the three earnouts that were entered into at closing. The fair value of $1.6 million has been determined using a scenario-based method which indicated partial achievement of the criteria over the three years.

The following table summarizes the reconciliation of Level 3 fair value measurements (in thousands):


	Contingent Consideration
January 1, 2021	$	8,960
Addition	9,297
Settlement	(6,138)
Measurement period adjustment
Remeasurement loss/(gain) recognized in the statement of operations	(7,006)
September 30, 2021	$	5,113

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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